Córdoba and Buenos Aires City to audit holders

Friday, July 5, 2013

Cedin certificates under criticism

The Cedin certificates to whitewash money seems to be failing to convince many sectors of the population of its legitimacy.

Buenos Aires City Hall and the Córdoba provincial government yesterday announced that they will be carrying out audits to all those who enter money via the tax amnesty law, in order to collect possible arrears from gross income tax.

Buenos Aires City Mayor Mauricio Macri said that they are analyzing the possibility of conducting a fiscal monitoring of those citizens who bring back their undeclared money through the amnesty, and described the Cedin certificates as “a parallel coin with no backing.”

“Finance Minister Néstor Grindetti is analyzing the situation, then we will decide what measures to take,” said Macri.

Meanwhile, Cordoba’s government warned that those who whitewash their undeclared assets through the Cedin certificates will “be identified and their activities checked to determine the sum they’ll have to pay in gross income tax.”

“Although there are aspects which are not defined or regulated, the provincial tax bureau will search and analyze what goes on with the Cedins, as with any other taxpayer,” said Cordoba’s Finance Minister Angel Elettore.

US article slams Cedin

US news agency Bloomberg News published an article this week entitled “Give Us Your Real Dollars for Our Fake Dollars: Argentina Credit,” in which it harshly criticizes the national government’s tax amnesty bill.

“The nation’s foreign reserves have fallen at the fastest pace in more than a decade to a six-year low of $37.2 billion, as Argentina uses the money to pay debt instead of borrowing dollars at interest rates that are more than double the 5.95 percent average in emerging markets,” reads the article.

Interviewed by Bloomberg, Hernán Lacunza, a former general manager of the Central Bank who runs the research firm Empiria, stated that “the deliberate intention of the government is for the Cedin to trade like a quasi-currency. People will probably go running to exchange them for dollars as soon as they can so the effect on reserves will be ephemeral.”

According to the article President Cristina Fernández de Kirchner “is trying to shield reserves at a time when the nation’s energy imports are surging and its trade surplus narrows.”

“The tax amnesty plan will probably fail as it isn’t addressing inflation, which is the cause behind the decline in reserves. The real driving-force for why we have reserve losses, why you have poor confidence, and why you have poor growth in Argentina is inflation,” Daniel Volberg, an economist at Morgan Stanley, was quoted as saying in the article.